Australian (ASX) Stock Market Forum

GDO - Gold One International

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hmmmmm

decisions decisions,

NAV or GDO =-/

time for a coffee then studying into NAV and maybe move GDO =/

:confused:

So those who are currently investing within GDO would more so be holding onto them for long term until they clear there debts or minimise debts which is targetted for 1 year?
 
TabJockey said:
It was 800 inc. admin and according to the last announcement "progress has been made reducing cost per ounce" and 600-650 an ounce is a more likely long term average. Not exactly sure what they are running at over at NAV in the present though, but their q4 report should be out shortly.

Assuming novo's figures are correct, 80M in debt to 24M in assets is a riskier prospect, and you would expect to be compensated for that risk with capital growth which is not happening in the market. The debt also effects the earnings, a very rough EPS estimate for 2011 with GDO would be 6-10c (which would pay off its debt in about a year).

Nav will make 6-8c EPS in 2011 but does not have the risk profile GDO has. The kicker for me will be the rare earth entitlements that are basically a bonus of 1-2c per share that the market has not woken up to.

GDO has a very juicy cost base but there are probably better technical and fundamental options out there. The market is going a bit cold on gold stocks also, with Uranium and Zinc looking to be a better alternative prospect in the next few years according to some analyst reports.
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NAV have assets totaling $20,769,00
Liabilities $24,246,00 inc. debt of $15,188,00, however that may now be in the vicinity of $12,000,000. Their cost of production is almost twice that of GDO.

http://www2.aspecthuntley.com.au/pdf/comsec/aer/today/NAV_cp.pdf
 
In my approach I don't give a large weight to book assets, I just compare how much money is going to be earned for me, for how much money I have to pay for a share, and I compare that risk/return to its contemporaries. I am going to be out long long before any liquidation takes place if it goes down that road.

GDO has a significantly lower production cost per ounce but wouldn't you agree that its prospective earnings per share is 6-10c? And that it has risk factors that some of its contemporaries do not?
 
RE: Tab, soz man been dying of infection (not literally dying but feels really bad). Anyway I guess with your last post mine is going to be useless for you but for the others who weight book value, DRA has zero debt, cashflows 30+ million a year, 28 mill in the bank as of October (more by now), has another two mines in the pipeline, and a 40% interest in the "Weld Range Metals" project, NPV of 681 million 10% risk adjusted, all for a market cap of ~130 million fully diluted. Management previously had a buyback in place but cancelled it, the money is probably going to be needed for Weld and the two new mines, one due this year one next year from memory.

Anyway back onto the real topic on hand, GDO, in relation to most gold projects it's undervalued, however the assets are still relatively quality. I've run the numbers over NAV, and it's an attractive company but only while gold prices are high, it's extremely leveraged to the gold price, so a short term price reduction of 10% will hurt them more than GDO due to the maths behind cost of production vs sale price, but by the same token NAV has more upside if the POG keeps marching up. Either way I rate GDO's gold mines higher than NAV's gold mines (mines = all exploration and production projects), and that might just be me, obviously other people will appreciate NAV more. Anyway in summary, I don't think arguing X is better value than Y is a good use of time when both are incredibly undervalued. Hopefully we both make buckets of cash, the fundamentals certainly indicate that we will so all that's left is for the prices to more accurately reflect them.

PVF.
 
Tyler Durden said:
31st of Jan. Either someone out there knows something we don't, or this is the most under-valued stock on the ASX.
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Its usually the former, but im going to run some models tonight to see at what point I would buy. You would think there should be great value in anything <30c.
 
ParleVouFrancois said:
RE: Tab, soz man been dying of infection (not literally dying but feels really bad). Anyway I guess with your last post mine is going to be useless for you but for the others who weight book value, DRA has zero debt, cashflows 30+ million a year, 28 mill in the bank as of October (more by now), has another two mines in the pipeline, and a 40% interest in the "Weld Range Metals" project, NPV of 681 million 10% risk adjusted, all for a market cap of ~130 million fully diluted. Management previously had a buyback in place but cancelled it, the money is probably going to be needed for Weld and the two new mines, one due this year one next year from memory.

Anyway back onto the real topic on hand, GDO, in relation to most gold projects it's undervalued, however the assets are still relatively quality. I've run the numbers over NAV, and it's an attractive company but only while gold prices are high, it's extremely leveraged to the gold price, so a short term price reduction of 10% will hurt them more than GDO due to the maths behind cost of production vs sale price, but by the same token NAV has more upside if the POG keeps marching up. Either way I rate GDO's gold mines higher than NAV's gold mines (mines = all exploration and production projects), and that might just be me, obviously other people will appreciate NAV more. Anyway in summary, I don't think arguing X is better value than Y is a good use of time when both are incredibly undervalued. Hopefully we both make buckets of cash, the fundamentals certainly indicate that we will so all that's left is for the prices to more accurately reflect them.

PVF.
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Sounds like your doing some quality analysis there PVF, NAV is leveraged to the gold price as you say but its price correlation to it is not very strong.

When I run DCF's I use a 12% factor for large caps, 15% for medium and 20% for small (50-300m for me). Do you factor in geo political risk when discounting a company like GDO? I like to err on the side of caution so I would use 20% as opposed to your 15% for such a company but its probably a bit heavy handed.

Do you ever use Black Scholes to value mines?
 
TabJockey said:
Translation: I hope some people believe it, buy the stock and help dig me out of this hole!
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There is obviously something wrong with this company.

Or the market is absolutely stupid.

 Resource base of >21 Moz, including 8.60 Moz in measured & indicated category
 Reserve base of 1.53 Moz

Market cap around $250m.

Something is seriously amiss here.

Maybe like CTO having 10m oz at 14 g/t.

:cautious:
 
Yo Tab, someone mathematically minded as you might be horrified, but I don't really use that much complex analysis such as Black-Scholes (I'm somewhat familiar with the maths, but I don't use it). I just search for companies where the company is so cheap that you don't need complex maths to justify the investment, e.g. GDO with a probable PE of 4. Even a 12 year old will tell you that 25% a year sounds good when the bank is only offering 6-7%.

To Kennas, I think the only thing amiss here is the perceived risk of investing in South Africa, sure it's not a Canada or Australia of investing, but it's almost certainly not as risky as the discounts applied to ASX listed companies imply. The "wrong" thing you are talking about is pretty much this company, up until now it's been plagued by problems, BEE implementation, labor force striking, and financing for the bonds option, these are all just recently sorted and production is starting to hit targets.

Realistically I'd expect GDO to stay this cheap for another quarter, maybe two as the market gets used to the idea of GDO being profitable, instead of problem plagued.

Oh and I loled at the comparison with CTO, GDO is actually improving the production as promised, unlike CTO and their "1000 ounces produced this quarter!!! Brilliant news!! Everyone be happy and hand over some more cash".

One other "cosmetic" problem I see is the name of this company, it just sounds dodgey, Gold One International, it needs a name like "African Goldmines" to get it sounding like an official producer. Just my probably incorrect opinion.

PVF.
 
Note: I'm still a beginner.

I read through this whole thread and no one has made mention of the annual report figures or the newest announcement? It seems that GDO has got their assets/debt situation into a more favourable position. On top of this they have had good figures for the first two months on the year, indicating that they may very well be on their way to exceeding there target.

Furthermore, a pre-feasability study for the Ventersburg project is on its way at the end of Q1.

So, from my newbie perspective, it seems like a lot of the worry related to GDO's risk profile may have dissipated with the most recent balance sheet and safe Q1 production figures.

Still a beginner, so correct me if I'm wrong, which I probably am.
 
Hi Charles, i think GDO's higher risk profile has more to do with the geo-political issues that exist in the country they're based - namely South Africa.
There is an underlying risk there that they will at some point move to nationalise the country's mining assets.

I'm no expert on the subject so maybe some of the more clued up posters could comment.
 
The South African government would have to compensate the assets seized in a nationalization of the mining sector. Compensate as in, pay a reasonable amount of money for each mine. The results of the nationalization will probably alienate many political allies, and will most likely reduce investment in the country by foreigners to zero for mining.

That all being said I personally think that the South African government won't nationalize their mining industry, it just doesn't make sense, they get tax and employment from companies investing there. If anything they should be taking steps away from nationalization and making South African a more investment friendly place (not saying that it isn't, but it could be improved).

Also imo the price of the shares of GDO has been reflecting the results of last year or the year before, GDO was in a pretty messy situation before, with Black Economic Empowerment negotiations on, the workforce striking, missing production targets and a potential bond maturity that could have perhaps collapsed the company. Since those days GDO has improved to be almost unrecognizable from itself two years ago or so, all the above issues are solved, with production running AHEAD of scheduled 120k ounce per annum (at 120k per ounce per annum GDO is trading on a PE of about 4).

So it's really up to what you believe is making GDO cheap, is it just the (unjustified) fear of nationalization of South African mining assets, or is it just ignorance by most people as to just how much GDO has improved as a company. Personally I'm quite big on GDO (having done quite a lot of research, it definitely lines up as an interesting investment).
 
Don't get me wrong, I hold GDO - but the bottom line is, the risk is there whether it's plausible or not and the market would be taking that into account. I would be very hesitant to predict what any politician is going to do, especially in Africa : )
 
GDO is looking very healthy ATM. SP appears to rising every day. Have been with them since the BMA days and I must congratulate the directors for turning this company around.
Can only see a bright future for this show and I'm staying with them.
 
ParleVouFrancois said:
So it's really up to what you believe is making GDO cheap, is it just the (unjustified) fear of nationalization of South African mining assets, or is it just ignorance by most people as to just how much GDO has improved as a company. Personally I'm quite big on GDO (having done quite a lot of research, it definitely lines up as an interesting investment).
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PVF, how do you go about valuing such a company? I.e how do you come to the conclusion 'I think exploration company A's share is worth about $5'. I know you are big on small-cap resource/exploration stocks, I have difficulty on working out how to gauge if these are cheap or expensive when they are not yet returning a profit.
Cheers!
 
It comes from experienced I guess, GDO is cheap due to trading on a probable PE of 4 (if they make 120k ounces of gold this year). It basically comes down to judgement, some ores/minerals are worth x per tonne as a rule of thumb, depending on what level of JORC resource they are (inferred indicated etc).

One thing I LOVE about companies is the lack of a need to raise money for further development of the resources, things like CAP and LNC have such brilliant management that they fund themselves, one of the biggest problems of small caps (even ones with economic deposits) is that BIG capital raisings are required, so that helps me find if a company is cheap. It's the additional of several factors all together which makes me conclude that a company is cheap, there is no one thing to look for, it's a bunch of things all together which forms a brilliant company at a cheap price, perhaps I'm wrong with my judgements, perhaps I'm right. A company has to be REALLY cheap to get me interested though, as in several 10's of percent lower than it's "real" value according to me.

I'm sorry if that didn't explain adequately, been having trouble sleeping recently so perhaps that made little sense LOL.
 
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